Circular debt to be Rs50-60 billion by July 2020

[Kabira]

correct provincial govt carries the blame
but KPK still hasnt received all of its loyalties based upon revised formula agreement in 2008 and way less on AG formula

KP have received billions of $, they should have taken care of districts where dam is located. I already said that they are asking the rate to increase even further. Which is already way ahead of what other countries pay.

 

[ejaz007]

Power sector circular debt surges to Rs1.9 trillion

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ISLAMABAD: The power sector circular debt continues to haunt Pakistan’s economy as it has swelled to almost Rs1.9 trillion as the payables have hit Rs990 billion mark and loans and liabilities parked in PHPL (Power Holding Private Limited) stand at Rs800 billion, a senior official at Power Division told The News.

‘This shows that the sitting government has piled up Rs800 billion in the circular debt which belies the claims of the government of scaling down the monthly inflow in the circular debt from Rs38 billion to Rs12 billion and will be reduced to zero by December 2020.’

During the ongoing talks with the government, hesaid, IMF mission is said to have also expressed its sheer dismay over the massive increase stock of circular debt.’ When the PTI government took the charge, the official said, the circular debt stood at Rs1.1 trillion after the completion of the caretaker regime. However, it was just less than Rs1 trillion when the PML-N government completed its tenure with Shahid Khaqan Abbasi as prime minister. According to the data available with The News the circular debt has precisely increased to Rs1.89 trillion by December 2019.

According to NEPRA officials, this incumbent government has already increased the tariff by 12.5 to 30 percent in power tariff by passing all inefficiencies, capacity charges, and Net Hydel Profit. Right now in the tariff the huge amount of Rs650 billion is already included in the head of capacity payment charges of powerhouses. The total capacity charges stand at Rs850 billion but out of it, Rs650 billion alone is part of the tariff. This means that full payment in the tariff is not included causing soaring circular debt. The required tariff rationalization is also not done as in the last quarterly tariff adjustment there was a gap of Rs72 billion which is not recovered yet. And more importantly, the Dollar-Rupee parity has also hit the power sector the most, as the tariff is determined in cents and the indexation of capacity payments is also in dollars.

The government has increased the power tariff by 12.5 percent for the consumers having no ToU meters (Time of Use) and 30 percent for the consumers having ToU meters. The government has already passed a huge amount of Rs226 billion to the end consumers which the PML-N government had not passed. This improved the cash flow situation in the power sector but from January 2020 onwards, this government does not seem to maintain the cash flow situation as the process of passing the past liabilities of Rs226 on to the end consumers was completed in January 2020.

Apart from it, the official said, in the past during PML-N government, NEPRA increased the permissible losses of tariff from 13.5 percent to 16.5 percent and the sitting government is stilling glued to that decision taken primarily because of the worsening law and order situation in many pockets of the country owing to which recovery of electricity bills was not possible. Now while the situation has normalised and there is no law and order situation across the country, but the increase in permissible losses by 3 percent in the tariff continues to exist and the government continues to fleece almost Rs148 billion per year from the compliant consumers. He said the revenue-based load shedding by the government of 3000- 5000MW at different times of the year continued which resulted in a great reduction in demand and owing to the reduced demand, the powerhouses remain idle which is why the payments of capacity payment have swelled manifold which is paid by the end consumers.

He said only rudimentary efforts were being made to increase electricity sales in Balochistan, KP and Sindh where huge swaths of areas are without regular power. This has led to an increase in discontent among the public because of which the federation is under pressure. The “CPEC power projects have also been allowed 80% mandatory off-take even when these do not come within the ambit of the Economic Dispatch Order. As these are highly over-invoiced, their tariffs are high and their huge impact is also reflected in the power tariff.

He added that the Qatar LNG used in power plants is overpriced and also on the take and pay contract saying it is again leading to an increase in tariff. The industrial experts are of the view that Nepra does not have the required necessary audit qualifications which is why the DISCOs are able to get their inflated claims accepted which is also causing a rise in the tariff. The same is true for the Monthly Fuel Price Adjustments. The CPPA(G) as the clearing house has become a tool for the Power Division and forces Nepra to accept all claims without proper audits.

The Power Division secretary, when contacted, said that the official, who deals with the circular debt, was in a meeting with the visiting IMF delegation. However, he added that the monthly inflows in circular debt had been decreased from Rs38 to Rs12-23 billion and the amount will come to zero by December end this year.

https://www.thenews.com.pk/print/612710-power-sector-circular-debt-surges-to-rs1-9-trillion

 

[ziaulislam]

Power sector circular debt surges to Rs1.9 trillion

Listen

ISLAMABAD: The power sector circular debt continues to haunt Pakistan’s economy as it has swelled to almost Rs1.9 trillion as the payables have hit Rs990 billion mark and loans and liabilities parked in PHPL (Power Holding Private Limited) stand at Rs800 billion, a senior official at Power Division told The News.

‘This shows that the sitting government has piled up Rs800 billion in the circular debt which belies the claims of the government of scaling down the monthly inflow in the circular debt from Rs38 billion to Rs12 billion and will be reduced to zero by December 2020.’

During the ongoing talks with the government, hesaid, IMF mission is said to have also expressed its sheer dismay over the massive increase stock of circular debt.’ When the PTI government took the charge, the official said, the circular debt stood at Rs1.1 trillion after the completion of the caretaker regime. However, it was just less than Rs1 trillion when the PML-N government completed its tenure with Shahid Khaqan Abbasi as prime minister. According to the data available with The News the circular debt has precisely increased to Rs1.89 trillion by December 2019.

According to NEPRA officials, this incumbent government has already increased the tariff by 12.5 to 30 percent in power tariff by passing all inefficiencies, capacity charges, and Net Hydel Profit. Right now in the tariff the huge amount of Rs650 billion is already included in the head of capacity payment charges of powerhouses. The total capacity charges stand at Rs850 billion but out of it, Rs650 billion alone is part of the tariff. This means that full payment in the tariff is not included causing soaring circular debt. The required tariff rationalization is also not done as in the last quarterly tariff adjustment there was a gap of Rs72 billion which is not recovered yet. And more importantly, the Dollar-Rupee parity has also hit the power sector the most, as the tariff is determined in cents and the indexation of capacity payments is also in dollars.

The government has increased the power tariff by 12.5 percent for the consumers having no ToU meters (Time of Use) and 30 percent for the consumers having ToU meters. The government has already passed a huge amount of Rs226 billion to the end consumers which the PML-N government had not passed. This improved the cash flow situation in the power sector but from January 2020 onwards, this government does not seem to maintain the cash flow situation as the process of passing the past liabilities of Rs226 on to the end consumers was completed in January 2020.

Apart from it, the official said, in the past during PML-N government, NEPRA increased the permissible losses of tariff from 13.5 percent to 16.5 percent and the sitting government is stilling glued to that decision taken primarily because of the worsening law and order situation in many pockets of the country owing to which recovery of electricity bills was not possible. Now while the situation has normalised and there is no law and order situation across the country, but the increase in permissible losses by 3 percent in the tariff continues to exist and the government continues to fleece almost Rs148 billion per year from the compliant consumers. He said the revenue-based load shedding by the government of 3000- 5000MW at different times of the year continued which resulted in a great reduction in demand and owing to the reduced demand, the powerhouses remain idle which is why the payments of capacity payment have swelled manifold which is paid by the end consumers.

He said only rudimentary efforts were being made to increase electricity sales in Balochistan, KP and Sindh where huge swaths of areas are without regular power. This has led to an increase in discontent among the public because of which the federation is under pressure. The “CPEC power projects have also been allowed 80% mandatory off-take even when these do not come within the ambit of the Economic Dispatch Order. As these are highly over-invoiced, their tariffs are high and their huge impact is also reflected in the power tariff.

He added that the Qatar LNG used in power plants is overpriced and also on the take and pay contract saying it is again leading to an increase in tariff. The industrial experts are of the view that Nepra does not have the required necessary audit qualifications which is why the DISCOs are able to get their inflated claims accepted which is also causing a rise in the tariff. The same is true for the Monthly Fuel Price Adjustments. The CPPA(G) as the clearing house has become a tool for the Power Division and forces Nepra to accept all claims without proper audits.

The Power Division secretary, when contacted, said that the official, who deals with the circular debt, was in a meeting with the visiting IMF delegation. However, he added that the monthly inflows in circular debt had been decreased from Rs38 to Rs12-23 billion and the amount will come to zero by December end this year.

https://www.thenews.com.pk/print/612710-power-sector-circular-debt-surges-to-rs1-9-trillion

Pretty much expected
I think it will hit around 2400 billion before levelig off(unless govt decides to go to old games)

Good thing is that privitization of power plants will give govt somehere between 500-600 billion the rest will have to be paid from budget
(We have to account large amount of devlauetion and huge interest rate on this loan as well)

 

[ShaikhKamal]

https://thediplomat.com/2020/02/is-pakistans-economy-recovering/

Is Pakistan’s Economy Recovering?

While there are positive signs, the IMF bailout conditions continue to pinch for average Pakistanis.

By Kunwar Khuldune Shahid
February 07, 2020
addressing the World Economic Forum at Davos in January, Prime Minister Imran Khan claimed that the year 2020 will be one of economic growth for Pakistan. Khan’s words echoed his vows to the domestic audience, as he has promised fiscal “development” in the country within the ongoing calendar year.

After a tumultuous first 12 months since the Pakistan Tehreek-e-Insaf (PTI) government took over in August 2018, the fiscal positives for the country have indeed been tangible in recent months.

In September, Pakistan’s current account deficit dropped by 80 percent to a 41-month low of $259 million, with a 111.5 percent rise in foreign direct investment (FDI) and 194 percent increase in private investment. With FDI of $1.34 billion during the first half of the current fiscal year, a 68.3 percent increase was registered in January, compared to $796.8 million of the same period of the previous fiscal year.

This month, the reserves of the State Bank of Pakistan (SBP) also hit a 21-month high at $11.586 billion. The economic positivity was also reflected by the Karachi Stock Exchange (KSE), which registered a 16-month high this month, crossing the 42,000 point mark after a cumulative increase of 13,000 points in four months.

The financial developments in Pakistan have been duly recognized globally as well, with Moody’s Investor Service upgrading Pakistan’s economy outlook from negative to stable in December. The World Bank has also acknowledged Pakistan as one of the top 10 “most improved” countries in the Ease of Doing Business Index.

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While there are positives aplenty, almost all of them have come in the aftermath of Pakistan reaching a 13th bailout agreement with the International Monetary Fund (IMF) in July last year. The agreement was designed to address a multitude of macroeconomic imbalances spearheaded by a balance of payment crisis.

The PTI government was much criticized for taking over nine months to go to the IMF. Finance Ministry officials revealed at the time that the initial plan under former Finance Minister Asad Umer had been to seek aid from other countries instead of approaching the Fund, for which a Finance Bill was also passed 12 months ago.

The delay meant that by the time the government implemented an IMF instructed market-driven currency exchange rate, the Pakistani rupee had already lost over 50 percent of its value against the U.S. dollar. However, in the six months since the IMF bailout agreement, the Pakistani rupee-U.S. dollar exchange rate has eased from around 165 to the current 155.

Pakistani rupee-U.S. dollar exchange rate artificially afloat around the 100 mark.

“There has been an annual 5 percent depreciation for the rupee against the [U.S.] dollar since at least the 1970s. Whenever you artificially fix the value – like [former Prime Minister] Shaukat Aziz fixed it around 60-65 or Dar at 100 – that depreciation isn’t allowed. And when you do that, the currency rates snaps back into its actual place [after the period of artificial valuation],” Financial Analyst at FX Empire Shahab Jafry told The Diplomat.

“Currency markets work on trends and sentiments. This snap forms a self-fulfilling prophecy, which generates a multiplier effect. And as a result we have seen the [Pakistani] rupee fall over 40 percent and not the 20-25 percent it would have fallen over the previous four to five years,” he added.

While the IMF-dictated policies have steered the economy toward macro corrections, the impact on the masses has been especially jarring. Furthermore, the abovementioned delay in agreeing to the IMF terms meant that by the end of August 2019, inflation had hit an 87-month high of 11.6 percent. January saw a 12-year high inflation rate of 14.6, which the State Bank of Pakistan declared “transitory.”

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The IMF conditions, coupled with the government’s negligence leading up to the bailout, continue to take their toll on the masses with persistent increase in prices of gas, power, and fuel. Furthermore, while inflation has caused an hike in the prices of commodities and food items, mismanagement has seen shortages of basic dietary ingredients like tomatoes, wheat, and sugar.

The state has attempted to address the inflation through the SBP maintaining a high policy rate at 13.25 percent, providing the increased interest rate as a savings incentive for the masses. However, critics argue that with the inflation being cost-push and not demand-pull, the enhanced rate won’t suffice in addressing it. Furthermore, the high interest rate is attracting overseas investment in treasury bills.

“The high investment is owing to carry trade, where overseas investors are putting their money here owing to the high interest rate – this is ‘hot money.’ When you’re getting hot money owing to high interest rate you’re reluctant to reduce the interest rate, especially when there are no triggers for growth,” maintains Shahab Jafry.

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Farrukh Saleem, a former spokesperson on economy for the PTI, says the government has been trapped by this hot money. “They’ve attracted the $2.2 billion owing to high interest rates – through treasury bills, and rupee convertible accounts. The interest rate in the U.S. is 1.75 percent, while Pakistan is offering 13.25 percent. So they are borrowing [U.S. dollars] and investing them. If the government lowers the interest rate, the investors will run away,” he told The Diplomat.

Saleem, whose criticism of the government’s policies prompted the PTI government to disown him as their spokesperson last year, further argues that Pakistan’s economic outlook depends on which statistics you choose to read into.

In November, Federal Board of Revenue (FBR) reported a shortfall of 220.4 billion rupees in revenue collection. A 1 trillion-rupee shortfall is expected on the revenue target of 5.230 trillion, which had been revised in December from the original 5.503 trillion rupees at the start of the fiscal year.

2.7 million tax filers for tax year 2019 was almost twice the number of filers in the previous year, but still a fraction of the number of individuals that come under the tax net.

The PTI government had come to power over vows of accountability and transparency, which meant greater scrutiny on tax returns and a crackdown on largescale corruption, which Khan deems as the predominant reason behind Pakistan’s economic woes.

The government aims to bolster the economy by filling the fiscal holes caused by misappropriation, which resulted in the promulgation of the National Accountability (Second Amendment) Ordinance, 2019 in December.

Even so, given the fiscal impact felt by the masses in the first year-and-a-half of the PTI rule, a significant percentage of the populace has become more skeptical. Critics blast such measures for being “selective accountability” designed more to target political opponents than for any benefit to the economy.

This rings truer given the continued influence of former PTI General Secretary Jehangir Tareen over the government, despite having been disqualified by the Supreme Court. Furthermore, the PTI’s critics point to Tareen, and other business and mill owners in the PTI’s federal and provincial cabinets, who benefit from financial crises like inflated sugar prices.

Critics say there is a lack of economic growth in the country, which even Khan’s aide on commerce concedes, and question how the high interest rate could result in any progress for local businesses.

Salman Shah, the government’s financial advisor in Punjab, however, points to the extent of the economic crisis that the PTI inherited, and maintains that the worst is over.

“We’ve had to carry out painful reforms – made the exchange rate market-based, which led to massive devaluation and inflation particularly in energy products, and food inflation even more so, but we’ve been firefighting to ensure that the more vulnerable segments are brought into the social safety net to mitigate the impact of macro adjustment. The likes of Ehsaas Programme [to address inequality] and Kamyab Jawan [to provide opportunities to the youth] are prominent examples,” he told The Diplomat.

“We need to see why we repeatedly go to the IMF. Structural transformations are needed in Pakistan’s production system – agriculture, industry, or services – to improve our productivity and export competitiveness,” says Shah. “Import substitution with domestic production, and export promotion is important. Car manufacturing, for instance, has been declining in the country because a lot of its constituents are imported – that needs to change. In agriculture, owing to devaluation our wheat has become cheaper in dollars, hence it is being increasingly smuggled, causing the current domestic shortage.”

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“[Meanwhile], exchange rate realignment have made our exports more competitive, but we need to make them even more robust. Energy and gas export sectors are being given regionally competitive prices. Yes, there are glitches, but they are being addressed. The uproar among the Faisalabad textile businesses [over energy prices] is not as much as it was a few months ago. Similarly, this so called ‘hot money’ owing to high interest rate is not a demon that we were better off without. In fact, the $2.2 billion that has come, means the domestic banks now have [an] extra $2.2 billion which they can lend to the private sector – when that happens, the yield curve would come down, bringing the interest rates down,” he adds.

Khan’s dealings in Davos, where he met U.S. President Donald Trump and IMF President Kristalina Georgieva, are also being seen as evidence of traction that Pakistan’s regional role is getting internationally.

The potential for increased U.S. influence in the region, amid the continued search for stability in Afghanistan, and the standoff with Iran following the killing of its Quds Force commander Qassem Soleimani, could be interpreted in the power corridors of Islamabad and Rawalpindi as an opportunity for the country to make itself useful for Washington again. However, Islamabad would have to counterbalance any financial gains from Washington with its trade-war adversary, Beijing, which continues to dictate the China-Pakistan Economic Corridor (CPEC).

Relaxation at the counterterror watchdog Financial Action Task Force (FATF) is one of many financial and geopolitical benefits that Islamabad will seek in exchange for letting the IMF run its economic affairs. It is based on IMF instructions that Pakistan has been asked to keep the interest rate higher than the inflation rate, with the government having been barred from borrowing money from its own central bank.

“The borrower feels the impact. If it’s for consumption then there is less consumption, if for investment then there is less investment. We’re basically running the IMF program. As things stand we are meeting all the indicators and targets given to us,” Shah says.

“However, the CPEC is a huge factor in increasing investment. Many foreign parties are coming and buying areas in the special economic zones. The first drops of rain have come,” he adds.

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[ejaz007]

Circular debt increasing by Rs12 bn a month

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ISLAMABAD: Prime Minister Imran Khan on Monday directed for out-of-the-box solutions to reduce electricity and gas tariffs on sustainable basis. He gave this direction while chairing a high-level meeting to reduce electricity and gas tariffs and provide relief to domestic consumers and industries.

Among others, the meeting was attended by Minister for Energy Omar Ayub Khan, Adviser on Finance Dr Abdul Hafeez Sheikh and Minister for Planning and Development Asad Umar.

The prime minister said that without taking into account interest of the country, expensive and illogical agreements and arrangements were made by the previous governments, whichresulted in expensive electricity and circular debt. The prime minister was told that in order to prevent power theft, effective measures have been taken, which had resulted in an income of Rs122 billion.

The meeting was informed that monthly increase of Rs38 billion in circular debt has been reduced to Rs12 billion, which will be reduced to zero by the end of this year.

Imran Khan said that the top priority of the government was to provide relief to people with low-income segment. On his directions, various proposals were presented in order to stabilise and reduce electricity prices for domestic consumers and industries.

Special Assistant to Prime Minister on Petroleum Nadeem Babar presented suggestions for a long-term plan to reduce gas prices.

https://www.thenews.com.pk/print/615560-circular-debt-increasing-by-rs12-bn-a-month

 

[Syed1.]

Circular debt increasing by Rs12 bn a month

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ISLAMABAD: Prime Minister Imran Khan on Monday directed for out-of-the-box solutions to reduce electricity and gas tariffs on sustainable basis. He gave this direction while chairing a high-level meeting to reduce electricity and gas tariffs and provide relief to domestic consumers and industries.

Among others, the meeting was attended by Minister for Energy Omar Ayub Khan, Adviser on Finance Dr Abdul Hafeez Sheikh and Minister for Planning and Development Asad Umar.

The prime minister said that without taking into account interest of the country, expensive and illogical agreements and arrangements were made by the previous governments, whichresulted in expensive electricity and circular debt. The prime minister was told that in order to prevent power theft, effective measures have been taken, which had resulted in an income of Rs122 billion.

The meeting was informed that monthly increase of Rs38 billion in circular debt has been reduced to Rs12 billion, which will be reduced to zero by the end of this year.

Imran Khan said that the top priority of the government was to provide relief to people with low-income segment. On his directions, various proposals were presented in order to stabilise and reduce electricity prices for domestic consumers and industries.

Special Assistant to Prime Minister on Petroleum Nadeem Babar presented suggestions for a long-term plan to reduce gas prices.

https://www.thenews.com.pk/print/615560-circular-debt-increasing-by-rs12-bn-a-month

Should have read the news before sharing it. Your Nawaja Butt left a circular debt that was increasing at Rs. 38b a month:

The meeting was informed that monthly increase of Rs38 billion in circular debt has been reduced to Rs12 billion which will be reduced to zero by the end of this year.

 

[Turingsage]

Circular debt is least of Pakistan's amazing debt profile. Getting rid of all circular debt still leaves Pakistan in need of huge unsustainable foreign loans just to tread water.
There will be NO DEVELOPMENT budget for perhaps several generations

A federation run on debt!
By Hasaan Khawar
Published: February 18, 2020
TWEET EMAIL

Prime Minister Imran Khan. PHOTO: PID/FILE

Last year for the first time in Pakistan’s history, the markup on the federal government’s outstanding debt exceeded its net revenue receipts. This means that by the time the federal government paid the interest cost on the existing debt, it had already surpassed its resources by about Rs53 billion (2018-19). The rest of the entire federal expenditure was undertaken with borrowed money.

The federal government only gets 42.5% of the divisible pool but incurs 67% of the national expenditures. Unless this anomaly is removed, the government will keep on running into serious fiscal problems, weakening the federation’s capability to function effectively.

The federal-provincial resource distribution is decided under the National Finance Commission (NFC) Award. Under the 18th Amendment, Article 160 of the Constitution was amended to ensure that the share of the provinces in each NFC Award shall not be less than their share in the previous award. Any changes in this would require amending the Constitution, which in turn would require a hard-to-get consensus amongst the political parties. Nonetheless, sooner or later we’ll have to re-open the discussion around vertical distribution of resources.

But more importantly, there is a need to rationalise the disproportionate expenditure of the federal government. What goes into two-thirds of the country’s expenditure?

Within the pie of the current federal expenditure, presently about 50% goes to debt servicing, 8-9% Within the pie of the current federal expenditure, presently about 50% goes to debt servicing, 8-9% goes to pension and superannuation allowances and another 13-14% goes to pay civil and military salaries. All these reflect government’s essential obligations, which are quite inflexible at least in the short term without a goes to pension and superannuation allowances and another 13-14% goes to pay civil and military salaries. All these reflect government’s essential obligations, which are quite inflexible at least in the short term without any room for reduction.

These rigid expenditures eat up about 110% of the net federal revenue receipts. By the time the federal government is done with discharging these obligations, it has already run out of its revenues by a wide margin. For all the other expenditures, whether it’s for building highways and power plants, running state-owned enterprises, purchasing defence equipment, or even repaying the loans, the federal government has to get new loans.

Under the huge salary and pension liabilities lies a complex system of state patronage where government employment is used more as a tool for buying loyalties and less for service delivery; contractual employees are made permanent with a stroke of a pen to buy votes with no regard to the pension liabilities they create; and political compulsions and anxiety about the next election cycle takes precedence over concerns for the future generations.

It’s hardly a surprise that in the last 10 years, the federal government’s pension expenditure has grown five-folds (from Rs85 billion in 2009-10 to Rs421 billion in 2019-20). In contrast, the federal government on an average spent a rupee on development for every four rupees spent on the current expenditure in 2009-10. By 2018-19, this unfortunately got squeezed to a rupee of development expenditure for every Rs11 of current expenditure.

We cannot keep on borrowing against the future forever, especially when all of this money is going down a bottomless pit. The issue of the ballooning government size is even more important than the much talked-about circular debt and state-owned enterprises. The latter could still be settled within a short span of time, given the political will. But to address the former, we need decades.

We need to cut down the size of the government, through freezing recruitment for unproductive lower-rank positions constituting bulk of the government, tearing down useless ministries, abolishing unnecessary support staff positions, introducing a fully funded pension system and more. Unless we start talking about this elephant in the room, no amount of loans, foreign capital, CPEC or IMF is going to address our economic woes.


https://tribune.com.pk/story/2158785/6-federation-run-debt/

 

[Zulfiqar]

Pakistan is raising PKR 200 B for circular debt via energy sukuks (bonds) through PHL.

Another PKR 100 B is being raised via Power holding LTD for a short term in order to finance utility bill deficit owing to corona crisis.

This will add PKR 100 B to debt while PKR 200 B may be used to pay existing liabilities of CPPA. .

Term sheet of sukuk

https://nbp.com.pk/pes/files/Pakistan-Energy-Sukuk-II-Term-Sheet.pdf

Some interesting insights from DG Debt and an economist (to cover economy in general and our debt and power market e.t.c)

 

[ziaulislam]

the circular debt isnt the issue..the rise in circular debt is
mere 2400b rupees can be worked out..problem is it is still rising..Pakistan needs to acheive net zero

 

[crankthatskunk]

First of all I was born in Uganda and consider Uganda to be second country after the UK. I have no great love of India or Pakistan. I do not hold a Indian passport nor have a desire to have one.
As for Hindutwa the last time I attended a temple was many years ago only as a social necessity since I had the intelligence at age 13 that ALL RELIGIONS consist of dupes and charlatans that prey on the semi-intelligent of this world.
Your debt problems are very real and no amount of deceit and self deception is going to cure it

Saying you came from Uganda, you still have Indian flag on your profile. Says something.
It also bust your comment "you have no great love for India".

Secondly, i am certain you are one of those Indians who had been expelled from Uganda and given refuge by the UK. I actually had been to Uganda and know first hand in what regard Indians are remembered there.
Not only in Uganda but in most East African countries.

 

[muhammadhafeezmalik]

Should have read the news before sharing it. Your Nawaja Butt left a circular debt that was increasing at Rs. 38b a month:

The meeting was informed that monthly increase of Rs38 billion in circular debt has been reduced to Rs12 billion which will be reduced to zero by the end of this year.

Source???

the circular debt isnt the issue..the rise in circular debt is
mere 2400b rupees can be worked out..problem is it is still rising..Pakistan needs to acheive net zero

Government is increasing the price of electricity means shifting the burden of theft and mismanagement of energy department on honest consumer but even then the circular debt is rising, this is sheer incompetence.

 

[VCheng]

the circular debt isnt the issue..the rise in circular debt is
mere 2400b rupees can be worked out..problem is it is still rising..Pakistan needs to acheive net zero

Mere "2400b" rupees is $15b or thereabouts, an amount comparable to the forex reserves. And increasing, albeit at a slower pace.

 

[ziaulislam]

Mere "2400b" rupees is $15b or thereabouts, an amount comparable to the forex reserves. And increasing, albeit at a slower pace.

Thay needs to paid in rupees to local IPP with almost half owned to govt based IPP/WAPDA

Its equal to 1.5 yrs of federal development (not provincial funds included) fund or equal to 1/3 of its single year fund

So federal govt van easily pay if off in 3-4 years if it just freezes its development fund(only federal development fund)

But the issue is its growing..if it even stops at 3 trillion it will be a sucess..
The govt can then sell bonds and do some book management to pay off the rest.

Of this 800b is already in govt debt and has been parked in liabilities
So the true deficit is issued 1600b rupees

 

[VCheng]

Thay needs to paid in rupees to local IPP with almost half owned to govt based IPP/WAPDA

Its equal to 1.5 yrs of federal development (not provincial funds included) fund or equal to 1/3 of its single year fund

So federal govt van easily pay if off in 3-4 years if it just freezes its development fund(only federal development fund)

But the issue is its growing..if it even stops at 3 trillion it will be a sucess..
The govt can then sell bonds and do some book management to pay off the rest.

Of this 800b is already in govt debt and has been parked in liabilities
So the true deficit is issued 1600b rupees

You may be correct in estimating that the debt is manageable. However, it remains one of the key suggestions of IMF, and no government, the present one included, has managed to actually stop the rise in debt, which shows the whole power sector, and its management, in a very poor light.

 

[ziaulislam]

You may be correct in estimating that the debt is manageable. However, it remains one of the key suggestions of IMF, and no government, the present one included, has managed to actually stop the rise in debt, which shows the whole power sector, and its management, in a very poor light.

the power sector is hemorrhaging 300 billion rupees per year

what needs to be done is reconcile this loss three prong strategy

1. renegotiating with IPPs, decreasing cost by introducing low cost renewable
2. transmission loss & decreasing theft
3. increasing the tarrif and adding subsidies from the budget

govt estimates it would save 160-200b from IPPs doing away with capacity charges..IPPs seems to favor this because they think govt will in turn be able to increase supply and production

however how to plug the rest is still an open question


===================================================================================

Power sector reforms to save Rs300b
Umar hits out at PML-N for setting up power plants despite lack of transmission network


Our CorrespondentNovember 24, 2020

PHOTO: EXPRESS
ISLAMABAD:
The government on Monday claimed that it had taken reform measures in the power sector that would result in cumulative savings of Rs300 billion over a period of three years from 2021 to 2023.
Talking to journalists, Minister for Planning, Development and Special Initiatives Asad Umar termed the circular debt a “landmine” for Pakistan and held the Pakistan Muslim League-Nawaz (PML-N) government responsible for all “sins”.
He lamented that the country lacked a transmission network for the transport of electricity but still the PML-N set up power plants to place burden of capacity payments on consumers. He claimed that capacity utilisation of power plants, which stood at 84% in 2018, dropped to 55% during Pakistan Tehreek-e-Insaf (PTI) government’s rule.
The planning minister, who also heads the Cabinet Committee on Energy (CCOE), said capacity payment obligation stood at Rs488 billion in 2018. The government projected that it would increase to Rs1.473 trillion by 2023 due to 55% capacity utilisation. A tariff increase of Rs4.09 per unit will be required in 2023 to clear Rs450 billion worth of circular debt base of 2018.
The government has also estimated another tariff increase of Rs8.09 per unit due to expected rise in capacity payments to Rs890 billion.
He said the PTI government had decided to get rid of the “centre of power” in the Power Division by introducing a competitive tariff regime to ensure cheaper energy.
He said the PML-N had increased power generation capacity but loadshedding continued across the country including Karachi due to a lack of investment in the transmission network.
“The Punjab government and other agencies had opposed LNG and coal-based power plants in the province but still they were established and now they have defaulted,” he said.
He added that the PTI government was introducing power sector reforms under which competitive tariffs would become possible under the bulk power market when the Competitive Trading Bilateral Contract Model (CTBCM) would come into force in the next 18 months and benefit the common consumers. The CTBCM was recently approved by the National Electric Power Regulatory Authority (Nepra).
He alleged that under the previous arrangement, politicians, bureaucrats and distribution companies as well as their officers had been benefiting because the price was being paid by the consumers.
The minister said a reduction in the rate of return on equity of public sector projects approved by the CCOE on September 2 would result in a reduction in the cost of generation by about Rs100 billion during 2021-23.
Likewise, memorandums of understanding signed with independent power producers (IPP) would have an impact of Rs60 billion during 2021-23.
He said the adviser to prime minister on finance was leading a committee to implement these MoUs.
Umar said the CCOE’s decision to unlock take-or-pay contracts of LNG-based power plants in Punjab would lead to cumulative savings of Rs136 billion in 2022-23 through tariff reduction at the rate of 74 paisa per unit in FY22 and 66 paisa per unit in FY23.
He did not agree that this burden had been shifted to gas companies, saying that he had separately undertaken another initiative that would ensure consumption of LNG in other areas.